Sherman Oaks Bankruptcy & Retirement Lawyers
If you have found yourself deep in medical debt or on the verge of losing your home due to foreclosure, you, like many people, may be considering dipping into your retirement accounts to pay off the financial debt. Before you do this, you should consider your options carefully, because there are generally big tax penalties if you withdraw retirement funds before you are at retirement age. Furthermore, you may be able to protect your retirement assets, and other property, simply by filing for bankruptcy, as opposed to trying to pay down the debt. Here at Wadhwani & Shanfeld, our Sherman Oaks bankruptcy & retirement lawyers can help you make the best decision for your specific situation.
Debtors Under Retirement Age
If you are under 55 and you withdraw from a 401(k) account, or you are under 59 and a half and withdraw from your Roth IRA account, you get dinged with a pretty hefty tax penalty. For some people, it may seem like this is a necessary evil of paying down their debt. But the problem with this mentality lies within a misunderstanding of what debts are secured, and which are unsecured. Unsecured debt is debt from credit cards, medical debt, personal loans, and student loans. Most unsecured debt can be discharged by filing for Chapter 7 bankruptcy (not including student debt), without any potential of the lender seizing your assets. This is not true of secured debt, such as a car loan or home loan. If this debt goes unpaid, the lender has the opportunity to seize your car or house, unless you qualify for Chapter 13, which is used to reduce and eventually discharge secured debt.
Your Retirement Accounts are Mostly Protected From Creditors
The money in your retirement funds is exempt from creditors/lenders. This means that even if you have hundreds of thousands of dollars in medical debt, the lender will not be able to get their hands on your retirement funds (pensions, 401(k) accounts, and Roth IRA accounts). In almost all cases, it makes more financial sense to file for bankruptcy rather than take out retirement funds (even if you are over 60) to pay off your debt. However, these funds are only protected when they are in the actual retirement account; once they are withdrawn into your bank account, they can be seized. Furthermore, if you have over a certain amount of assets in an IRA, it may not be exempt from creditors.
Call a Sherman Oaks Bankruptcy & Retirement Attorney Today
You worked hard for your retirement funds. They should not be diminished by a predatory lender. An attorney can help you protect your retirement funds and other assets by filing Chapter 7 or Chapter 13 bankruptcy. While bankruptcy holds a negative connotation for many people, it can actually be used to great effect in diminishing or extinguishing debt. Call our Sherman Oaks Wadhwani & Shanfeld bankruptcy and retirement attorneys today at 899-996-9932 to schedule a free consultation.
